INDIVIDUAL
REPRESENTATIVE PAYEES
FOR THE
SOCIAL SECURITY ADMINISTRATION
IN THE DENVER REGION

March
2005

A-07-05-15055

EVALUATION
REPORT

Mission

We improve SSA programs and operations and protect them against fraud, waste,
and abuse by conducting independent and objective audits, evaluations, and investigations.
We provide timely, useful, and reliable information and advice to Administration
officials, the Congress, and the public.

Authority

The Inspector General Act created independent audit and investigative units,
called the Office of Inspector General (OIG). The mission of the OIG, as spelled
out in the Act, is to:

Conduct and supervise independent and objective audits and investigations
relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation
and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems
in agency programs and operations.

To ensure objectivity, the IG Act empowers the IG with:

Independence to determine what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.

Vision

By conducting independent and objective audits, investigations, and evaluations,
we are agents of positive change striving for continuous improvement in the
Social Security Administration's programs, operations, and management and in
our own office.

MEMORANDUM

Date: March 21, 2005

To: James C. Everett
Regional Commissioner Denver

From: Inspector General

Subject: Individual Representative Payees for the Social Security Administration
in the Denver Region (A-07-05-15055)

OBJECTIVE

Our objective was to confirm that beneficiaries in the care of representative
payees existed; and, through personal observation and interviews, to determine
whether the beneficiaries' food, clothing and shelter needs were being met.

BACKGROUND

Some individuals cannot manage or direct the management of their finances because
of their youth or mental and/or physical impairments. Congress granted the Social
Security Administration (SSA) the authority to appoint representative payees
to receive and manage these beneficiaries' benefit payments. A representative
payee may be an individual or an organization. SSA selects representative payees
for Old-Age, Survivors and Disability Insurance beneficiaries and Supplemental
Security Income recipients when representative payments would serve the individual's
interests.

SSA's primary concern is to select the payee who will best serve the beneficiary's
interest; and preference is normally given to a beneficiary's parent, legal
guardian, spouse or other relative. SSA considers payments to a representative
payee to have been used for the benefit of the beneficiary if they were spent
on the beneficiary's current maintenance-which includes the costs incurred in
" obtaining food, shelter, clothing, medical care, and personal comfort
items."

We conducted a nation-wide review of individual representative payees serving
14 or fewer beneficiaries (see Appendix A for details). There are approximately
4.3 million of these types of representative payees who serve approximately
5.5 million beneficiaries. To provide statistically valid nation-wide projections,
we selected 275 individual representative payees for review, of which 7 were
in the Denver Region. These seven representative payees received and managed
approximately $4,828 in monthly benefits for eight beneficiaries.

RESULTS OF REVIEW

We confirmed the existence of the eight beneficiaries in the care of seven
representative payees in the Denver Region; and, through personal observation
and interviews, we found that the beneficiaries' food, clothing, and shelter
needs were being met. For six of the eight beneficiaries, nothing came to our
attention that would lead us to believe that the representative payees did not
use the Social Security benefits received for the beneficiaries' needs. However,
we found the representative payee for two beneficiaries did not perform her
duties.

This representative payee turned over the full amount of the Social Security
benefits to the beneficiaries without instruction on how to use the funds. SSA
policy defines this representative payee as a conduit payee. SSA policy states
that conduit payees do not exercise control over the funds and cannot accurately
account for how the funds are spent. In conduit payee situations, SSA is required
to determine whether a new payee is needed or the beneficiary is capable of
receiving direct payment.

The conduit payee served as representative payee for two beneficiaries who
are her nieces. When originally assigned as representative payee, the beneficiaries
resided at her residence. However, at the time of our interviews, the beneficiaries
no longer lived with the representative payee.

One beneficiary, age 19, moved to an apartment 9 weeks before our interview.
The representative payee met the beneficiary at the bank each month, withdrew
the monthly SSA benefit payment, and provided the funds to the beneficiary.
The representative payee did not provide the beneficiary with direction or instruction
on how to use the funds. We interviewed the beneficiary at her apartment, and
it appeared she independently managed the SSA benefit payments to meet her own
food, clothing, and shelter needs.

The other beneficiary, age 16, moved from the representative payee's residence
to an apartment a few days before our interview. Based on our interview, it
appeared the beneficiary's food, clothing and shelter needs were met while she
resided at the representative payee's residence. However, during our September
7, 2004 interview, the representative payee stated that she planned to provide
the beneficiary with her SSA benefit payment each month and let the beneficiary
decide how the funds are spent since the beneficiary no longer lived in her
residence.

On December 12, 2004, we contacted the representative payee and asked her how
she managed the beneficiary's SSA benefit payments she received after our initial
interview. The representative payee stated she provided the beneficiary with
the SSA benefit payment amount and let the beneficiary decide how the funds
are spent.

We notified the Denver Regional Office of the circumstances, and it instructed
the Denver, Colorado, District Office to determine whether a change in representative
payee was warranted. On December 28, 2004, the Denver Regional Office informed
us that it determined the beneficiaries were capable of managing their own funds
and had made them their own payees. The Regional Office also informed us that
it was investigating a potential misuse by the former representative payee.

CONCLUSION

For six of the eight beneficiaries in our review, nothing came to our attention
that would lead us to believe the representative payees did not use the Social
Security benefits for the beneficiaries' needs. However, we found the representative
payee for the other two beneficiaries did not perform her duties because she
turned over the full amount of the benefits to the beneficiaries without instruction
on how to use the funds. We reported the circumstances of these two beneficiaries
to the Denver Regional Office, and it determined that the beneficiaries were
capable to manage their own funds. Since corrective action was taken, we are
not making any recommendations.

AGENCY COMMENTS

In its comments to our draft report, SSA agreed with the results of our review.
See Appendix C for the full text of SSA's comments.

Our population included all individual representative payees within the contiguous
48 States serving 14 or fewer beneficiaries as of May 20, 2004. To accomplish
our objective, we:

Reviewed the Social Security Administration's (SSA) policies and procedures
for monitoring representative payees and their responsibilities for the beneficiaries
in their care.

Obtained a data extract of representative payees from the Representative Payee
System as of May 2004 meeting our selection criteria (see Appendix B).

Selected a random sample of 275 representative payees nation-wide. We are issuing
a separate report on the nation-wide results, as well as separate reports for
each of the 10 SSA Regions.

Seven of the 275 representative payees were in the Denver Region. For these
seven representative payees, we:
verified the identities of seven representative payees and the eight beneficiaries
they served;
interviewed seven representative payees;
interviewed eight beneficiaries;
visited and observed the living conditions of eight beneficiaries; and
reviewed the Master Beneficiary Record, Supplemental Security Income Display
System, Numident, Master Earnings File, Representative Payee System, and Prisoner
Update Processing System records for each individual to confirm personal information
and identify discrepancies.

We performed our review in Colorado, Wyoming, and Utah and the Office of Audit
in Kansas City, Missouri, from July to November 2004. We conducted our review
in accordance with Quality Standards for Inspections issued by the President's
Council on Integrity and Efficiency.

Appendix B
Sampling Methodology
To identify the nation-wide population, we obtained a data extract from the
Social Security Administration's Representative Payee System of all individual
representative payees who had 14 or fewer beneficiaries in their care as of
May 20, 2004. This population was 5,380,635 representative payees who served
6,818,696 beneficiaries.

From this population, we excluded representative payees who had any of the
following characteristics:

resided outside of the 48 contiguous States;
served as their own representative payee as reflected in the Representative
Payee System;
had only beneficiaries who were in noncurrent pay status;
had an invalid state code or military address; or
managed total funds of $50 or less each month.

This reduced our sample population to 4,306,779 representative payees with
5,520,303 beneficiaries. From this population, we randomly selected 275 representative
payees for review. Twenty-five additional representative payees were chosen
to serve as replacements, as needed.

Accordingly, our review of the Denver Region consisted of seven representative
payees. Our findings in the Denver Region will be included in a national report
where statistical projections will be made.

Appendix C
Agency Comments

MEMORANDUM

Date: February 28, 2005

To: Inspector General

From: Regional Commissioner

Subject: Individual Representative Payees for the Social Security Administration
in the Denver Region (A-07-05-15055)--REPLY

Thank you for the opportunity to review the OIG Draft Report on Individual
Rep Payee Reviews for the Denver Region. We agree with the results of the review.

In December 2004, the Denver District office interviewed each of the two recipients
who had the same conduit payee. The office determined that each should be made
her own payee.

Development was conducted with the payee regarding a dedicated account. On
February 9, 2005 the Denver District Office prepared a Special Determination
that the payee did misuse funds in the amount of $1,143.00 for the period December
1, 2004 through January 1, 2005. The office sent a letter to the payee requesting
restitution for that amount. In addition, the office determined that the representative
misapplied $4,523 for the period October 1, 2003 through November 30, 2004.
The office issued a letter on February 9, 2005 requesting repayment of this
amount. The office will continue to pursue restitution of these amounts.

Please let me know if you have any concerns. You may contact Renee Booker,
RSI Programs, at 303-844-3481 if you need clarification on the payee issues.

For additional copies of this report, please visit our web site at www.ssa.gov/oig
or contact the Office of the Inspector General's Public Affairs Specialist at
(410) 965-3218. Refer to Common Identification Number A-07-05-15055.

Overview of the Office of the Inspector General

The Office of the Inspector General (OIG) is comprised of our Office of Investigations
(OI), Office of Audit (OA), Office of the Chief Counsel to the Inspector General
(OCCIG), and Office of Executive Operations (OEO). To ensure compliance with
policies and procedures, internal controls, and professional standards, we also
have a comprehensive Professional Responsibility and Quality Assurance program.

Office of Audit

OA conducts and/or supervises financial and performance audits of the Social
Security Administration's (SSA) programs and operations and makes recommendations
to ensure program objectives are achieved effectively and efficiently. Financial
audits assess whether SSA's financial statements fairly present SSA's financial
position, results of operations, and cash flow. Performance audits review the
economy, efficiency, and effectiveness of SSA's programs and operations. OA
also conducts short-term management and program evaluations and projects on
issues of concern to SSA, Congress, and the general public.

Office of Investigations

OI conducts and coordinates investigative activity related to fraud, waste,
abuse, and mismanagement in SSA programs and operations. This includes wrongdoing
by applicants, beneficiaries, contractors, third parties, or SSA employees performing
their official duties. This office serves as OIG liaison to the Department of
Justice on all matters relating to the investigations of SSA programs and personnel.
OI also conducts joint investigations with other Federal, State, and local law
enforcement agencies.

Office of the Chief Counsel to the Inspector General

OCCIG provides independent legal advice and counsel to the IG on various matters,
including statutes, regulations, legislation, and policy directives. OCCIG also
advises the IG on investigative procedures and techniques, as well as on legal
implications and conclusions to be drawn from audit and investigative material.
Finally, OCCIG administers the Civil Monetary Penalty program.

Office of Executive Operations

OEO supports OIG by providing information resource management and systems security.
OEO also coordinates OIG's budget, procurement, telecommunications, facilities,
and human resources. In addition, OEO is the focal point for OIG's strategic
planning function and the development and implementation of performance measures
required by the Government Performance and Results Act of 1993.